Economics, Ethics and health Care Funding

1
Economics, Ethics and health Care Funding

• Craig Mitton, PhD
• Faculty of Health and Social Development, UBC-O
• Centre for Healthcare Innovation Improvement,
  CFRI

2
Outline of Session

• Background to priority setting
• Economic framework overview
• Practical steps
• Key concepts
• Expected benefits
• A bit on ethics
• Activity in Canada and elsewhere

3
Background scarcity

• Allocation of health care funds according to
  defined populations is a global phenomenon
• Basic notion is that of a fixed funding envelope
  not enough to meet all needs

Services Claims on Resources

Resources
4
Levels of Priority Setting

• Provincial or state level
• Health authorities
• Hospitals
• Program areas
• Individual services
• Bedside

5
Background surveys

• Surveys in various countries have reported
  feelings of inadequacy amongst decision makers
  for priority setting
• United Kingdom (late 1990s)
• Australia (2003)
• Canada (late 1990s, 2004, 2005)
• Unclear what tools are available assist in such
  activity
• Consistent approaches to priority setting often
  not taken

6
Common Approaches

• Historical/ political allocation funding based
  on last years budget with some adjustments
• Can become whoever yells the loudest
• Continual growth in budgets
• Other approaches
• Needs assessment, core services
• Fail to consider basic economic principles

7
Economic principles

• Opportunity cost
• By investing in program A, some benefit lost by
  not investing in program B
• Lost benefit of the next best alternative use of
  resources is the opportunity cost
• Need to weigh out costs and benefits of service
  options

8
Economic principles

• The margin
• about the next unit of resources
• if I had 1.00 where would I invest that dollar
• if my budget was to reduce by 1.00 where would I
  find that dollar
• make the most of the available resources
  (regardless of how much is in the total pot)

9
Implications of the principles

• To do more of some things, we have to take
  resources from elsewhere, by either
• doing the same things at less cost or
• taking resources from areas of (effective) care
• Measure costs and benefits of health care
• Often about how much rather than whether

10
Economic approaches

• Compare benefits from programs funded to
  resources required
• Economic evaluation
• More pragmatic but still based on the same
  underlying principles
• Program budgeting and marginal analysis

11
PBMA

• Framework to assist decision makers in making
  choices around limited resources
• Used in health care since 1970s
• Currently being used in health authorities in
  Alberta and British Columbia
• Can be combined with ethical approaches in its
  application and is as evidence based as time and
  data allow for

12
From principles to practice
1. What resources are available in total? 2. In
what ways are these resources currently spent?
3. What are the main candidates for more
resources and what would be their
effectiveness? 4. Are there any areas of care
which could be provided to the same level of
effectiveness but with less resources, so
releasing resources to fund candidates in
(3)? 5. Are there areas of care which, despite
being effective, should have less resources
because a proposal in (3) is more effective (per
spent)?
13
PBMA Practical Steps

• Determine aim and scope of activity
• Identify and map resource use
• Form an advisory panel
• Define and weight decision making criteria
• Identify options for service growth and resource
  release
• Evaluate proposed investments and disinvestment
• Validate results, recommendations for
  (re)-allocation, communicate decisions
• Evaluation, refinement and ongoing revision

14
Key Concepts

• Shifting or re-allocating resources based on
  explicit comparison of options against the
  criteria
• Single group generating expansion/ reduction
  options
• Incentives to encourage participation
• Clinicians and managers working together
• Tool that supports decision making

15
Benefit measurement

• Approach generally depends on scope of activity
  and resources available
• Clinical outcomes
• QALYs, DALYs, WTP, DCE
• Multi-attribute decision analysis (MCDA)
• MCDA has a long history in other sectors
• Limited real health care examples published
• Fits with decision maker perspective

16
MCDA rating and scoring

• Score service options for investment and resource
  release in terms of benefits for patients under
  pre-defined set of criteria
• E.g., on a scale of 1 to 10 how geographically
  equitable is service Y?
• To get a single measure of each services benefit
  need to combine the scores
• Assuming a linear function, can add the scores
  taking into account criteria weights

17
PBMA Outcomes

• Primary benefit from PBMA
• Achieving real resource shifts that are
  consistent with strategic decision-making
  objectives
• Secondary benefit from PBMA
• Changes in decision making culture, evidence
  base
• Defining objectives and programs
• Ownership of planning process
• Transparent and defensible decision making
• Clinician engagement and partnership

18
Potential Challenges

• Data and time requirements
• Benefit measurement and relative value
• Mis-alignment of incentives
• Re-allocation of resources
• BUT these are always a problem in health care!!
• Managers and docs alike tend to want more formal,
  explicit, transparent method for priority setting
  and resource allocation

19
Incorporating ethics

• Ethical framework
• accountability for reasonableness
• Has gained momentum the last few years
• hospitals, technologies, drugs
• Focus is on ensuring that the chosen process of
  priority setting is fair and legitimate
• Based on four ethical conditions

20
fair process

• What evidence, reasons and principles are used
  and where did they come from?
• Who is involved in the process, what
  communication plans were used?
• What mechanisms allow for revisiting of decisions
  if new evidence arises?
• How will decision makers ensure the process was
  fair?
• Economics and ethics have different focuses both
  can contribute to priority setting activity

21
Canadian PMBA examples

• Chinook Health Region (AB)
• Surgery, chronic disease
• Headwaters Health Authority (AB)
• Surgery, long term care
• Calgary Health Region
• Macro, childrens services
• Vancouver Island Health Authority
• Macro, within portfolios
• Interior Health Authority
• Community care services
• Northern Health Authority
• Home and community care

22
Northern Health Authority

• Scope all non-hospital HCC services
• Participants range of clinicians, managers and
  finance personnel
• Objective recommendations for allocation and
  re-allocation to impact 2007/08 budget year
• Timeline
• May 17 decision maker training workshop
• June form advisory panel
• July formulate and validate decision criteria
• Aug/ Sept generate investment and release
  options
• Sept. 26 decision making retreat
• Oct. recommendations to Executive
• Nov/ Dec. evaluation and process refinement

23
Home Community Care

• Criteria defined and assigned weights
• Health gain, access, appropriateness, strategic
  alignment
• Scoring of proposals for investment and resource
  release on quantitative score sheet
• Scores entered into decision analysis software
• Transferred to excel to present benefit scores
• Recommendations for re-allocation, endorsed by
  Senior Executive
• Evaluation and refinements for next year

24
SUB-CRITERIA GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING GUIDELINES FOR SELF-RATING Rating (1-9) 0opinion 1some evidence 2high quality evidence
  1 2 3 4 5 6 7 8 9 Rating (1-9) 0opinion 1some evidence 2high quality evidence
i) incremental health gain - magnitude of health gain as measured by relevant clinical outcomes resulting from the initiative compared to current practices available services no difference in outcomes compared with current practices/services   minimal improvement to outcomes compared with current practices/services moderate improvement to outcomes compared with current practices/services high improvement to outcomes compared with current practices/services vast improvement to outcomes compared with current practices/services    
ii) anticipated impact - the incremental improvement the initiative will have on clients health and quality of life and performance no difference on quality of life and performance compared with current practices/services minimal improvement on quality of life and performance compared with current practices/services   moderate improvement on quality of life and performance compared with current practices/services   high improvement on quality of life and performance compared with current practices/services   vast improvement on quality of life and peformance compared with current practices/services    
iii) early intervention - likelihood that early intervention will reduce the risk of complications 0-11 12-23 24-35 35-46 47-58 59-70 71-82 83-94 gt95    
iv) target population - of incremental clients to be served annually by the initiative divided by of new clients with this condition/ disease in NH region 0-11 12-23 24-35 35-46 47-58 59-70 71-82 83-94 gt95    
25
Home Community Care

• Evaluation
• add in a criteria on innovation
• improved vetting of original business cases
• greater focus on re-allocation
• BUT implemented in relatively short time,
  engagement perceived to be high, and process
  viewed as improvement over previous historical/
  political allocations
• additional time would allow for greater use of
  evidence and more in-depth analysis of proposals

26
International applications

• Approaching close to 100 exercises in over 80
  health organizations
• England, Scotland, Wales, NZ, Australia, over the
  last 3 decades
• Wide range of program areas, majority at micro/
  meso levels more recently macro level
  applications
• Distinct shift from focus on efficiency to more
  of a management process aimed at re-allocating
  resources to better meet wide range of
  organizational objectives

27
International applications

• South West Area Health Service (WA)
• Initial enthusiasm, training and survey work
• Lack of leadership prevented moving forward
• Waitemata District Health Board (NZ)
• Internal champion, training for both macro level
  exercise and within Mental Health
• Process carried out BUT
• Challenges in understanding business case
  approach
• Lack of evidence due to rushed completion
• Laid back CEO, lacked highest support

28
International lessons
Clear messages Need for involving multiple
stakeholders Incorporating ethical
frameworks Understanding of organisational
behaviour and context Leadership is
everything Watch out for (major) organizational
instability
29
Summary

• Despite challenges, decisions have to be made
  with or without an explicit approach to priority
  setting
• PBMA can assist decision makers in thinking about
  economic principles and re-allocating resources
• Lots of examples of PBMA implementation and
  evaluation in Canada and elsewhere

30
Acknowledgements Michael Smith Foundation for
Health Research and Canada Research Chairs program
Craig.mitton_at_ubc.ca